Thai Current Account Surplus Seen Narrowing on Baht’s Strength

Thailand’s current account surplus probably narrowed in October from a month earlier as gains in the baht curbed overseas sales of cars, chicken meat and shrimp by undermining exporters’ competitiveness.
The current account surplus narrowed to US$1.1 billion from a US$1.18 billion excess in September, according to the median estimate of 13 economists in a Bloomberg News survey. The central bank will release the monthly indicator tomorrow at 2:30 p.m. in Bangkok.
“Exporters whose raw materials are from domestic sources are losing orders to competitors, especially China,” said Santi Vilassakdanont, chair of Federation of Thai Industries, a trade group of manufacturers. “The baht has strengthened at a faster pace than currencies in other Asian countries.”
The baht touched the highest against the dollar in more than seven-years this month, prompting exporters including Thai Union Frozen Products Pcl, the world’s second-biggest tuna canner, to petition the central bank to curb its gains. The stronger currency lowers exporters’ competitiveness by making their goods more expensive relative than rivals.
Thailand’s trade surplus in October fell to US$810 million from a record US$1.51 billion in September, the commerce ministry said on November 20. Exports last month were US$11.5 billion compared with a record US$12 billion in September, the ministry said.
Autos, Rubber
Exports of automobiles and parts last month slipped to US$1.07 billion from US$1.1 billion a month earlier, while poultry meat, shrimp and other frozen foods dropped to US$829 million from US$843 million, the ministry said. Rubber shipments fell to US$468 million from US$494 million.
“The baht’s strength will continue to be a drag on export growth next year,” said Nuchjarin Panarode, an economist at Capital Nomura Securities Pcl. “Slower economic growth in the country’s main markets may also curb exports.”
The economy in the US, the nation’s largest overseas market, grew at a 1.8% annual rate in the third quarter, the slowest this year, based on the median estimate of 58 economists in Bloomberg News survey. The Commerce Department report is due today at 8:30 a.m. in Washington.
Thailand’s baht has surged 13% against the dollar this year, the best performer among 15 Asian currencies tracked by Bloomberg. The gain compares with a 2.8% advance in China’s yuan, a 3.8% increase in Malaysia’s ringgit and a 1% advance in Vietnam’s dong.
Manufacturing
The Bank of Thailand is ready to buy or sell the nation’s currency to prevent volatility, Governor Tarisa Watanagase said on November 15. She has said the central bank can’t reverse the currency’s trend against the dollar.
Manufacturing production last month probably expanded 7% from a year earlier, accelerating from September’s 5% gain, according to 17 economists in a Bloomberg survey.
New vehicle sales in Southeast Asia’s biggest automobile market rose to 51,390 units in October from 49,382 in the previous month, according to a data compiled by Toyota Motor Thailand Co Ltd
The following table shows estimates for the year-on-year percentage change in factory production, as well as projections for the current account balance in US dollars.
———————————————————————————
Production Current
YoY Account
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Median 7.0% 1,100 Mln
Average 7.1% 1,033 Mln
High 9.5% 1,250 Mln
Low 4.4% 500 Mln
Number 17 13
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Action Economics 9.5% 1,000 Mln
CIMB Securities 6.8% 1,040 Mln
Capital Nomura Securities 5.5% 1,150 Mln
DBS Group 7.8% 840 Mln
Deutsche Bank 6.5% 1,200 Mln
Forecast 6.5% 1,085 Mln
IDEAglobal 7.0% 1,200 Mln
HSBC 7.1% 1,250 Mln
Kasikorn Research 7.9% 1,101 Mln
Phatra Securities 7.0% 1,100 Mln
Standard Chartered Bank 8.1% 871 Mln
Thomson IFR 9.5% 1,100 Mln
UBS 5.0% 500 Mln
Capital Economics 8.5% n/a
Citigroup 6.6% n/a
ING Groep 7.5% n/a
Lehman Brothers 4.4% n/a

 

Category: Thailand